White Russia Makes Progress

A visit to Minsk reveals a peaceful transition to economic freedom.

Belarus is an interesting, attractive country, certainly off the beaten track. A beautiful, rebuilt capital city of Minsk (mostly destroyed along with 30 percent of the country’s population during World War II), with wide boulevards and parks and superbly clean, belies its old reputation as the last dictatorship in Europe. Its economy is heavily statist, but 30 percent is private enterprise, and its information-technology sector is world class (see below). Its rating in the World Bank’s Doing Business, which compares all the world’s nations, is surprisingly high and improving.

The nation borders Russia, Ukraine, Poland, Latvia, and Lithuania. It has its own language, similar to but distinct from Russian, and its own long history. It was once an integral part of the Lithuanian empire, which stretched down to the Black Sea. It then was subordinated to the growing power of Czarist Russia and later became an integral part of the Soviet Union. Belarus also became an industrial/technological center where many of the Soviet Union’s heavy and sophisticated industries were located. It has a very skilled and educated workforce.I was invited there to speak at a conference on “Understanding Belarus Security.” It was co-organized by Washington’s Jamestown Foundation, Germany’s Konrad Adenauer Institute, and the Liberal Institute of Belarus under the auspices of the Minsk Dialogue. It continues the tradition of Belarus serving as a neutral regional hub for inter-European diplomacy following the Russian-Ukrainian ceasefire agreement. Our delegation also met with top foreign-ministry officials on improving understanding and relations with America. Belarus has become more independent of Russia since the Ukrainian conflict, rejected Moscow’s plans to establish a new airbase on its territory, and refused to join Russia’s trade war with Ukraine. Repression is mild, and the government retains a degree of popularity for providing stability and substantial economic growth. Witness the chaos in neighboring Ukraine, and how “privatization” of Russian state industries just ended in impoverishment and handing them over to billionaires. People are not so anxious for possibly chaotic, unjust “democracy,” as long as their government delivers safety, order, and economic growth. Grigory Joffe, Jamestown’s Belarus expert, writes in “The Declining Fortunes of the Belarusian Opposition,”

Specifically, the government led by President Alyaksandr Lukashenka, since 1994, was instrumental in propping up Belarusians’ civic identity, ensuring the country’s stability and security (Belta.by), building up its infrastructure, pursuing economic development, boosting the quality of governance, and even improving living standards—by several measures exceeding those in Belarus’s culturally close Eastern Slavic neighbors.

Many formerly communist East European nations are today, surprisingly, more dynamic economically than many debt-ridden West European nations weighed down by years of socialist baggage. After the conference I also spoke to students at the Liberal Institute in a hall called the “John Galt Club,” named after the famous character in Atlas Shrugged. The institute’s director is a very dynamic Belarusian student, Yauheni Preiherman, now studying for his Ph.D. in England. It was also he who helped organize the main conference. He introduced me to many of the students and I was very impressed by them.

Belarus’ Surprising Economic Ratings

More than 50 percent of goods produced in the country are delivered for export. The list of export products is sophisticated and varied. Among the major export commodities of Belarus are refined oil products, semi-conductors, potash and nitrogen fertilizers, metal products, busses, heavy trucks, tractors, chemical fibers, yarns, tires, dairy and meat products, and sugar. The private sector is led by exports from its brilliant information-technology services (IT) based at the Minsk High Tech Park free zone. The export of IT services grew from $50 million in 2005 to $800 million in 2015.

Belarus imports are mainly composed of energy resources (oil and natural gas), raw materials and components, metal products, raw materials for chemical industry, machine parts, and manufacturing equipment. Belarus has trade relations with more than 180 countries. The nation offers low costs and is attractive for tourism. It has eleven impressive war museums, one in downtown Minsk, another in the countryside at the old Stalin Line.

Doing Business measures the ease or problems of starting and running a business in nearly all nations. It was discussed at the conference and has become a very effective means to press Third World and former communist governments to facilitate and encourage economic growth.

Belarus rates surprisingly high on several measures. The nation ranks 12th in the world for “starting a business,” compared to Austria at 106th, France at 32nd, and Spain at 82nd. For “registering a property,” Belarus is number 7, Germany 62, and Ireland, known for its pro-business environment, 39. Rated for “ease of doing business,” Belarus is 44, compared to Ireland at 17, France at 27, and Spain at 33. For “enforcing contracts,” Belarus is number 29, Belgium is 53, Chile is 56, Poland is 55, England is at 33. See the Doing Business link above for exact details. Still, the regime is pressed to privatize its heavy industries, still mostly government owned. There is little street crime, which also makes the nation attractive for foreign investors. Economic freedom pales when street crime, kidnapping, and armed robbery are rampant, as in some Latin American countries.

Shakedowns and bribes to the police and government inspectors are a very common aspect of post-communist regimes. From what I learned, Belarus limits such small time, yet cumulatively devastating corruption, unlike Russia for example.

In conclusion, Belarus is progressing in ways favorable to economic progress and is much freer than its reputation as a surviving “Marxist” state. The British Guardian, in a positive article, asks “Is it accurate to call Belarus a dictatorship?” Although political opponents are sometimes jailed (a dozen in 2013), they are then shortly released. The dynamic, free market, and the rising living standards of neighboring Lithuania, Latvia, Estonia, and Poland, are vibrant examples for them. Often American policymakers don’t appreciate that “in much of the non-Western world, people desire order more than democracy,” writes Jamestown’s Grigory Joffe (see “Understanding Belarus”). He writes of “a legitimate fear of evil, destructive … behavior by their fellow countrymen that only a strong government can restrain. … Democracy cannot be exported, much less imposed, by an outside force. Simply put, one cannot build democracy other than on the homegrown foundation of civility and trust.” Having lived in lawless countries I concur totally with Joffe’s comments. Opposition movements in such nations demanding “democracy” are often supported by Washington, but many or most are not Jeffersonians in waiting.

Effective groups such as Students For Liberty and the Atlas Network, which I have long supported, help local think tanks and such groups to spread Western concepts of individual freedom, limited government, property rights, low taxes, and economic progress. Only a nation’s own people can really bring it progress. Washington is too ham-fisted and all too eager to threaten or even start wars as a “solution” to promote freedom. Then we wonder at the chaos our military interventions create.

Outstanding. Democracy is a god that has failed many a country. Like all ideologies, it can’t be imposed on people. It has to grow on them internally, along with the institutions necessary to sustain it. And there are many societal attributes that are just as important or more important than the form of government.

Belarus will do fine as long as it stays out of EU. If it joins will lose its young to better paying jobs in Western Europe.

his former Ukrainian blogger explains the reason why it was wrong for EE countries to join EU prematurely by explaining why against Ukraine joining EU:

“To say I’m a bit flabbergasted that it wants to join EU is a bit of understatement. Let’s think rationally for a moment. In terms of industry and products, Ukraine has absolutely nothing to offer to the EU; EU makes everything that Ukraine makes—and it makes it better and more efficiently. The only thing Ukraine offers to the EU is cheap labor. It’s a bad deal for Ukraine.”http://mavericktraveler.com/the-death-of-neoliberalism
The Death Of Neoliberalism

The truth is, Belarus is one of a handful of localities that benefited as a financial haven under Russian auspices. Estonia is the notable example, which lists ‘mineral exports’ as a primary source of growth income, although it produces none. Belarus actually produces no petroleum and has enjoyed subsidized Russian crude throughout, much as East Germany. Business freedom means currency freedom, which communist Czechoslovakia and Hungary exploited.

Being a showcase for hidden subsidized big projects from Putin would be something to behold. Turkey, Hungary,and Iran are enjoying Russian underwriting of nuclear development. It would be interesting to see the same in Belarus, although there are ambitious and long overdue hydropower here, apparently which will serve an increasingly footloose metals industry (consider that remote Iceland is developing hydro with the almost exclusive rationale for aluminum).

It is puzzling we do not hear of an array of such projects as aluminum in Russia proper, but its easy to see why: Russia is essentially a bankrupt treasure trove, with too many diseconomies and not enough labor to even sustain proposed gas development in Siberia on behalf of China (which will likely be a loss leader, because of China’s embrace of obsolescence, despite its trumpeting of big science.

Too much of that had rubbed off on Ukraine. We calculate that over 25 years of independence, 30% of utility and industrial energy has been wasted, and that had informed its dependence on Russian natural gas and lack of ambition to expand Donetsk coal, woody biomass, and building heat standards. The corruption of Timoshenko, the supposed reformer, had been informed bydesperation to keep up gas supplies and also european deliveries, on “over the barrel” financial terms.

This is a country that has already lost its soul to the devil, and a failed state. We will indeed see how Belarus evolves.

“Democracy Promotion” is a euphemism for imposing economic advantage for certain elites who utilize American soft and hard power to achieve their objectives. The gloss is that anything that serves “American interests” – even when those aren’t the interests of actual millions of Americans – is inherently promoting democracy because it is promoting the “American interests” of “the world’s greatest democracy.”

Talking about Belarus abroad is very important. I really appreciate it.

Just one thing I want to draw your attention to. “White Russia” in the title “White Russia Makes Progress” is the way the Kremlin wants the world to call my country. The name is BELARUS. Even UN adopted it and urged all countries to use it. “White Russia” is the way Russian imperialists call us to state that it is not a full-fledged country but a part of Russia that is temporary a sort of independent. “White Russia” is strongly denied not only by democratic pro-Western opposition but also by Ministry of Foreign Affairs. I know that in America you do not know such subtleties, but if we want build up the coalition for change in Belarus we’d better pay attention to such things.

I liked your article about Belarus. It is full of facts and good points. Now we are in the heat of another parliamentary election campaign. It is the same staging of the elections, fraud and no chance for the opposition to count votes. The economic crisis is deepening.

The government is trying to save the economy by old style Soviet/Socialist like tools (price fixing, subsidies to hand-picked state enterprises that are too-important-to-fail, giving tax and import tariff breaks for selected state companies, cheap credit to unreformed state enterprises, arbitrary confiscation of assets after numerous inspections, etc. Belarus is still a centrally planned Soviet style economy and the private sector has a difficult time.

We have been fighting hard to expand the area of freedom, but unfortunately in the crisis Lukashenko prefers his old tools and means to deal with economic problems. The main social asset of the Belarusian regime – stability – is also under threat. According to the estimate of the Belarusian government – Eurasian Foundation for Stabilization and Development –estimates that in the current employment structure about 800’000 employees of government enterprises are redundant.

Another ~800’000 Belarusians have left the country to work abroad. It means that the actual unemployment in Belarus is about 17 – 20%. The monthly income of over 70% of Belarusians is under $200. Belarus is a world leader in inflation in the period 1995-2015. In 2010 –2015 the Belarusian rouble was devalued by about 7 times. These are the costs of so-called stability. In fact, we see an outrageously low level of governance which is hidden in undemocratic procedures.

These are just a few thoughts to add to your picture of Belarus. From me it is too one-sided, too long-term geopolitical and misses the burning issues that we face every day in the country.

I will reply to your smart aleck pseudo-response as to what I “do not want to know”;

We are unaware of many fundamentally new developments in Russian aluminum, which was off and running in the 30’s, although Kazakhstan was trying to make deals with China. Most of your Wiki citation cc. Rusal, the Russian aluminum monopoly, describes repositionings of capital, not new construction, and that is barely beyond former USSR. So where is the global rampup of purchases (interestingly enough, magnesium was the real growth industry for Russia, as it is ancillary to electrowinning and desalinization –Israel grew too).

You might have looked up some WWII economics and found that Ukraine had a huge proportion of metallurgical industry including aluminum lost to the Nazis, which prompted Soviet dam sabotage there. And nothing doing here today.

Lately you read of deals to promote Yakutsk coal and Siberian natural gas to China, as well as incredibly dirty extraction of Nickel by Norilsk, and palladium and lithium. Well, where is the flood of Russian aluminum car bodies, and new aircraft? Where are the possible joint ventures with the likes of Alcoa, which now has a new mini-mill technology that cuts the energy cost of aluminum extrusion in half? Where is the flood of high tension electric cables to sell to Europe by which to create a renewable energy grid?

I am unaware of these, so you would more profitably use your time to look up some info.

As for Belarus’ hydropower, I refer to a chart in “The New Scientist”, which I can produce in personal hardcopy. You can follow the rest. The world, you see, is not quite as “flat” as you think.

To kalendjay
My primary point — most of russian Al is manufactured with hydropower.
And I didn’t quite grasp relevance of wwii history in this context.
BTW, it was _Soviet_ dam, situated in Ukrainian _Soviet_ Socialistic Republic that was destroyed by _Soviet_ troops retreating from the German onslaught.
I think that “Ukraine had a huge proportion of metallurgical industry including aluminum lost to the Nazis, which prompted Soviet dam sabotage there” put a different spin on the real story.

So, several comments are still in order
>>Rusal, the Russian aluminum monopoly, describes repositionings of capital, not new construction, and that is barely beyond former USSR.

1.1. New plant in Russiahttp://boaz-zavod.ru/
1.2 Ireland, Italy, Guinea,Sweden and so on have been safely outside USSR borders all the time.
>>as well as incredibly dirty extraction of Nickel by Norilsk, and palladium and lithium.

2.1 Can you prove that the extraction is really ‘increadibly dirty’
2.2 Lithium? really?

>>Where are the possible joint ventures with the likes of Alcoa, which now has a new mini-mill technology that cuts the energy cost of aluminum extrusion in half?
4.1. only bottom-line counts, Alcoa has no other choice in Quebec with its more expensive power and has some market for the automotive Al. Good for them.

>>As for Belarus’ hydropower, I refer to a chart in “The New Scientist”, which I can produce in personal hardcopy. You can follow the rest. The world, you see, is not quite as “flat” as you think.
5.1 Ohmy, ‘New Scientist’. I was born in Minsk, my aunt house can be seen in this article illustration and you’re trying to sell me this BS.
All the future hydropower greatness can be something like thathttp://eng.belta.by/society/view/belarus-to-build-two-major-hydropower-plants-by-2018-87236-2015/